Making Dollars and Sense of Sourcing and Global Trade ...fdra.org/wp-content/uploads/2015/07/amber-road-Making-Dollars_v4a.pdf · Source: Managing Global Trade – Rising Importance

© 2015 Amber Road, Inc. All rights reserved. Proprietary and Confidential.

Making Dollars and Sense of Sourcing and Global Trade Automation Gary M. Barraco Senior Director, Supply Chain Solutions

2 © 2015 Amber Road, Inc. All rights reserved. Proprietary and Confidential.


!  Low cost country sourcing

!  Emerging global markets

!  Proliferation of trade agreements

Key Drivers:

$0

$5

$10

$15

$20

$25

$30

$35

$40

1973 1983 1993 2003 2012

World Merchandise Trade ($ Trillions)

Source: World Trade Organization Statistics, 2013

Global Commerce is Exploding


Going Global Can….

!  Affect profitability !  Elongate the value chain !  Tie up working capital !  Add layers of additional costs for –  Product testing –  Trade compliance –  Tariffs and Duty –  Transportation


Supply Chain Complexity

Brands

Factories

Material Suppliers

Test Labs

Auditors FBO/ Agents

3PLs

Carriers

Customs EnHHes

Bi-lateral linkages between all supply network participants are difficult to build and maintain


Retail Industry Challenges

“Many [retailers] have failed to recognize the importance of a scalable, integrated platform of cross-functional processes and systems for global sourcing and import logistics. For these, it has become impossible to synchronize product development, merchandising, global sourcing, PO management, import logistics and finance operations and growth of private label volumes results in increased pain.” “…without new planning, execution and visibility tools and ‘enabling’ systems that help manage and integrate processes into one continuous stream of activity, the challenge could still prove too great.”

Source: Integrated Capabili4es for Global Sourcing and Import Logis4cs in the Retail Industry – A Smarter Strategy By Colin Taylor and Stephen Leng, IBM Global Services


A Supply Chain Diagram

San Fernando, Argentina

Burzaco, Argentina

Labatut, France

Arras, France

Nanjing, China

Inofita, Greece

Berwick, UK

San Adrian, Spain

Nashik, India

Rooty Hill, Australia

Minneapolis, MN United States

Gunma, Japan

Guangzhou, China


XLS

3PL

3PL

Traditional Approaches to SC Management !  Tactical vs. Strategic !  Low Cost vs. Innovative !  High Risk vs. Lower Risk

3PL

XLS

TMS

Supplier Management

Export Management

RPS

Import Management

SCV

Distro Center

3PL

EDI

Email Only

RM Supplier

!  Manual !  Point Solutions !  Outsourced

!  Disjointed !  Black Holes !  Non-Collaborative


Companies Recognize this Complexity

Shipments delayed in customs have a material adverse impact on our business

Inability to take advantage of free trade agreements is costing us a material amount today

Source: Managing Global Trade – Rising Importance But Lagging Execution, SCM World, July 2013

Strongly agree

Agree Neutral Disagree Strongly disagree

Complying with Global Trade Regulations is one of the top concerns we face as a business

70%

18% 8% 2 2

39%

25% 28%

4% 4%

43%

15%

35%

7%

SCM World Survey of Supply Chain Executives - 2013


Sourcing and Global Trade Automation

Order Ready

Order Picked Up

Received at Origin LSP

Booking Confirmed Departed In-transit

Status Documents Complete

Documents to Broker

Arrived

Cleared Customs

Ready for Delivery

Dispatch to Customer

Delivered

Product Development

Automating and integrating cross-functional processes for global sourcing and import logistics enables growth in volumes.

Supply Chain Visibility

Global Logistic Management

Global Sourcing

Risk & Quality Management

Global Trade Management

Product Concepts

and Designs

Material Sampling

Material Testing

Supplier Selection and Order

Mgmt Material Sampling

Production Tracking


Platform Benefits – Expect More

Supply Chain Success Factors

Innova4on

Agility

Risk Cost

Speed

Important, fundamental benefits

Increasingly the point of solu4on differen4a4on


The Business Impact: Time/Speed

!  Lack of system to transact and collaborate electronically via a cloud portal

–  On-boarding certifications –  Tech packs –  Costing –  Sampling –  Reduce email traffic to approve PO changes

!  Lack of documentation about material source or production !  Reduction to the number of sample submits !  Trimming schedule dates !  Pre-positioning materials !  Alerts to Testing and Inspection failures before shipment


The Business Impact: Cost

!  An inflexible costing system without BOM level costing

!  No visibility into the material order and receipt into the factory

!  Failure to factor all landed costs into sourcing decisions

!  Repeated product testing !  Increased transportation spend !  Allow vendors to submit costing with BOM or order changes !  Optimize supplier base for preferential trade or duty rates !  Reduce days in inventory through transportation

management !  Audit logistics spend minimized !  Reduced labor with Import / Export / Classification Process

Management


The Business Impact: Risk

!  Lack of a “glass pipeline” providing visibility at every stage using management-by-exception reports

!  Failure to incorporate country- or state-specific level regulations for testing or import/export

!  Screening suppliers based on restricted party lists !  Properly vetting suppliers through a staged/tiered process

of auditing !  Visibility to Tier 2 and Tier 3 suppliers to facilitate

compliance at all levels !  Validating all classification information for reporting and

documentation


The Business Impact: Agility

!  Sharing vendor capacity and open capacity across internal teams

!  An inflexible costing system without BOM level costing –  Collaborate on POs to manage production across vendors –  Communicate style and order changes quickly –  WIP Tracking at every stage to avoid delays –  Flexible material allocation and reuse to accommodate demand

changes –  Reduce import/export time through early and automated

classification


The Business Impact: Innovation

!  Collaborating with vendors early in the product lifecycle to collaborate on design

!  Conceptualization and image sharing to facilitate product design ideation

!  Utilizing suppliers and vendors to offer more options to possible fabric selections

!  Testing materials and create a Material Library !  Tracking materials used against historical performance data


100-Year Old Athletic Footwear Manufacturer Business Challenge

!  Manually intensive methods for managing purchase orders

!  Difficultly tracking inbound shipments

!  Customer service team had no immediate access to shipping information

!  Late shipments required expediting by air

!  Merchandisers sending POs to vendors via e-mail or faxing hard copies.

Solution Benefits

!  Cloud-based environment to execute POs, PO collaboration with changes, packing lists and invoices

!  Integration to 3PL for shipping and logistics info

!  Integration to a financial institution automating payment process with vendors

!  Conduct a 3-way match on the PO, PL, Invoice.

!  Air freight approval process was deployed to control this means of transport

!  Increase in fill rates by 10% - 15%

!  Six figure $ cost savings with 3-way match

!  PO process reduced from 3 people in 3 weeks to 1 person in 2-3 days

!  Strong reduction in air freight costs


Authentic American Clothier Business Challenge

•  Increase speed to market

•  Reduce duplication of activities across categories and brands

•  Simplify and expedite processes during reorganization

•  Revise the costing process

•  Improve product quality, fit and material innovation

•  Reduce headcount and supplier base

•  Consolidate all woven fabric sourcing

Solution Benefits

• Direct interface to PDM • Design and Sample Tracking

• Costing sheet and cost info calculated and kept on Product Master • BOM & BOL integration

• Homegrown systems integration Master Product & Vendor Data Management

• Reservation for Finished Goods and Materials • Assortment Advice

• Proto Tracking • Raw Material PO and Sample PO

• Material & Color Level Tracking

• Content Collaboration Portal

!  Suppliers have quick access to information and the ability to respond more cost effectively to critical supply issues

!  Reduced error rates that negatively impacted product development cycle times

!  Improved cycle times and data accuracy

!  Improved supplier analysis


Five-Star Footwear Brand Manufacturer Business Challenge

•  Need to streamline the PO collaboration process with vendors outside of the ERP system

•  Replace email or fax system in place with a consolidated platform for internal and external teams

•  Improve visibility into vendor pre- and post-production milestone events to ensure on-time delivery to customers

•  Make strategic decisions on vendor allocation

Solution

•  FG PO Management

•  PO Event and Alert Mgmt

•  Vendor PO Acknowledge

•  Raw Material PO

•  PO from SAP/PO Acknowledge back to SAP

•  Vendor PO Collaboration

•  Packing list/Carton Labels/ASN & Pre-ASN/ Commercial Invoice

•  Conflict Minerals PO Declaration

•  PO Change/ASN/Pre-ASN/Invoice to SAP

•  Event/WIP Tracking

•  Milestone data back to SAP

Benefits

!  Marked increase in fill rates by 10% - 15%

!  Error elimination, information consistency and accuracy.

!  Better view into QA trends focused inspections.

!  Inspector efficiency with instant note taking, image capture capabilities

!  255% ROIC and Payback Period of 1.7 years


Upscale US Retailer Focused on Young Consumers Business Challenge

•  Lack of shipment tracking and visibility into key milestones.

•  No single portal for all logistics operations and partners.

•  Homegrown system involved spreadsheets, emails and phone calls with international business units and over 30 trading partners.

•  Inventory replenishment was not accurate.

•  International expansion was hindered.

Solution

!  Multi-modal supply chain visibility functionality connecting brand with suppliers, logistics providers, brokers, and carriers.

!  Monitor inbound and outbound goods at the shipment, order, SKU and container level

!  ��Real-time updates

!  Visibility into container locations and status to manage detention and demurrage issues

!  Report on performance at party level

Benefits

!  Improved visibility of in-transit inventory

!  Enhanced customer satisfaction

!  Improved response time to potential out of stock situations

!  Enhanced supply partner performance

!  Reduced ASN cycle time by up to 10 days


Summary Value Areas

Value Areas Annualized Savings

Reduce manual processes and email communication for on-boarding suppliers $85,000

Ensure product testing is complete and meets standards to avoid a potential recall $240,000

Avoid a product recall $250,000

Reduction of Freight Forwarder Fees (Filing + document management) $ 25,900

Cut the processing time for PO management $62,000

Speed to market by minimizing communication gaps and collaborating on-line $ 29,500

Decrease air freight expenses with 3PL integration $ 19,760

Early classification and export management through product visibility $ 111,000

Improvement in efficiency of shipment processing (export) $ 12,000

Improvement in efficiency of dealing with shipments (export) $ 40,000

Fine and penalty avoidance due to license management $ 15,856



The New Definition

“Supply chain automation is defined as covering endless combinations of activities from

concept-to-order, order-to-shipment, and shipment to cash.

So there is a logical fit between technology providers that have strengths in one set of processes and others with another set of strengths to combine to offer companies a more complete technology platform on which to run the combination of processes that make the most sense to them.”

Janet Suleski, Gartner Group

March 2015


Global Trade is Complex

Dynamic, country-specific rules and regulations

Dozens of supply chain participants per transaction

Multiple languages, currencies, and time zones

Higher costs

Longer lead times

Global security initiatives



More Questions?

Contact Amber Road:

www.AmberRoad.com

[email protected]

+1-201-806-3656

GTM Best Practices Group

/gtmbestpractice

Visit us on

25